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Media Stories: 21/03/2006 - PO Reports Press Coverage

Sunday Telegraph:

Nonsense and lies - Blair's answer to Abraham
By Liam Halligan ( 19/03/2006)

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/03/19/ccliam19.xml

Guilty as charged - the stark conclusion of Ann Abraham, the highly respected Parliamentary Ombudsman. After an exhaustive 16-month investigation, she ruled last week that ministers did mislead the public over the safety of final salary pensions.

New Labour has a well-deserved reputation for treating Parliament with disdain. But ministers plumbed new depths when, within minutes of publication, they "rejected" the Ombudsman's 254-page report.

That would bring compensation costs down to £4bn over 40 years, says Altmann - and many pension professionals agree with her. So we're looking at £100m annually - or less than £2 per citizen.

Given the importance of restoring public trust in pensions - and government advice on pensions - this annual cost, a fraction of the Treasury's £3bn contingency fund, represents exceptional value for money.


Daily Telegraph 16 March

Government refuses to pay £15bn bill
By George Jones

http://portal.telegraph.co.uk/news/main.jhtml?xml=/news/2006/03/16/nloans316.xml

At Prime Minister's Questions, Mr Blair told Sir Menzies Campbell, the Lib Dem leader, that acceptance of liability for the whole of the loss would "set a precedent of extraordinary financial proportions". Sir Menzies asked what the point was of an independent ombudsman if the Government would not accept its conclusions.

Mr Blair said he understood the sense of "anger and anxiety" of those who had lost pensions "but we have been asked to give on behalf of the taxpayer a £15 billion commitment. We simply cannot do that in circumstances where the reason for the loss is the collapse of those pensions schemes themselves".

Out of 85,000 people who have lost their pensions, only 27 have so far received any compensation from the FAS.


Daily Telegraph editorial

Wed 15th March 2006

http://portal.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2006/03/15/dl1501.xml&sSheet=/opinion/2006/03/15/ixoplead.html

Government found guilty on pensions

The Ombudsman rightly asks the Government to replace the money people lost as a result of their employers going bankrupt with under-funded schemes. But it is no surprise that the Government refuses even to apologise to pension trustees for the distress its maladministration has caused. An apology is less congenial to the Government than spending a few more billions of our money.

As Frank Field MP says today, if the Government does not implement "the letter and the spirit of the Ombudsman's report", voters will conclude that "governments cannot be trusted". In this case, the voters would be right.

Daily Telegraph: 15 March

Pensions scandal: watchdog attacks Treasury
By Faith Archer and George Jones

http://portal.telegraph.co.uk/news/main.jhtml?xml=/news/2006/03/15/npens15.xml&sSheet=/news/2006/03/15/ixnewstop.html

Thousands of workers were misled by official information over the security of their occupational pensions and should be compensated by the Government, the Ombudsman states today. One of the most damning reports published by the official parliamentary watchdog on maladministration said leaflets on final salary pensions were "inaccurate, incomplete, inconsistent and potentially misleading".

The Ombudsman called on the Government restore the lost pensions and make additional "consolatory payments" as a recognition of the "outrage, distress and inconvenience" suffered by the victims of collapsed schemes.

Private sector pensions providers were fined £12 billion for selling personal pensions to people who left or failed to join company schemes. Some urged the Government to apply the same standards to its own literature that was applied to the private sector when assessing compensation.


Double standards on pension deficits

Saturday Telegraph, By Ian Cowie, Personal Finance Editor 18/03/2006

http://money.telegraph.co.uk/money/main.jhtml?xml=/money/2006/03/18/cmian18.xml&menuId=244&sSheet=/money/2006/03/18/ixperson.html

What would the Government - or the FSA - do to any insurance company that had been so careless with its promises? Well, look at what it did when insurers over-promised personal pensions. It ordered them to pay compensation of about £14 billion.

It is a chilling reminder of just how short-term this Government's horizons really are, despite all the cant about long-term planning, that its refusal to compensate those who have lost their life savings will simply boost social security bills in future.

But, by then, today's pack of cabinet ministers will be safely away from the scene, enjoying their taxpayer-subsidised pensions.


Financial Times Editorial:

A betrayal of trust placed in government
Published: March 15 2006

http://news.ft.com/cms/s/b380b586-b3c8-11da-89c7-0000779e2340.html

Of all the victims of the partial collapse of the occupational pension system, the biggest losers are the 85,000 workers who lost pension benefits when their company schemes were left without sufficient assets to meet their pension promises. For too long the government has tried to wash its hands of responsibility towards them. This position is no longer tenable following the publication of a devastating report by the ombudsman. Ministers should accept its findings while reserving the right to provide alternative remedies to those the ombudsman proposes.

The report shows that ministers and officials repeatedly talked up the benefits of company pensions while glossing over the risks. It sent further clear signals that people should invest in these schemes by providing generous tax incentives. Yet there was a yawning gap between the official rhetoric that pension promises were safe and the reality that the old minimum funding requirement, brought in after the Maxwell scandal, provided only limited safeguards.


FINANCIAL TIMES LEAD STORY WED 15 March, 2006

Prickly thorn that exposes cases of government incompetence
By Ben Hall, Political Correspondent

http://news.ft.com/cms/s/dfcfb04c-b3c8-11da-89c7-0000779e2340.html

She (the PO) reports to MPs and her conclusions have moral authority rather than legal force. But it is rare for the government to dismiss her findings outright. This has happened on only three previous occasions since 1967.

So ministers' categorical rejection of her report on occupational pensions has raised concerns among MPs that an essential check and balance against government incompetence and negligence is being discarded.

Tony Wright, Labour chairman of the Commons public administration committee, said the government's rejection of the ombudsman's conclusions, the second time it has done so in less than a year, was a "source of great concern".

Before the end of the year, Ms Abraham will also publish the findings of her investigation into the regulation of Equitable Life, the stricken life assurer.


Financial Times 17th March, 2006

Calls for compensation are falling on deaf ears
By Sharlene Goff

http://news.ft.com/cms/s/b627594a-b5b0-11da-9cbb-0000779e2340.html

The government has so far flatly refused to accept responsibility for the situation and has dismissed demands for full compensation for the victims. Its reaction has prompted criticism from MPs from all parties, as well as unions, pensions consultants, financial advisers, actuaries and campaigners.

There is a strong feeling among the victims and the pensions industry that at a time when the government is pushing through pensions simplification, it needs to restore some degree of confidence in pensions among investors.


Rob Budden in the Financial Times

17th March, 2006

The joke response to a gross injustice

http://news.ft.com/cms/s/c990b7d8-b5b0-11da-9cbb-0000779e2340.html

There are no two ways about it. These people have been dreadfully treated by the current government. Many of the 85,000 or so people who are now finding their retirement income promises dashed, dutifully paid into final salary schemes for several years. Some of them did so for several decades.

With MPs’ and other civil servants’ generous final salary pension schemes backed by the Treasury, this turns the stomach. But the government is refusing to budge on this issue, bandying around its £15bn figure as completely unaffordable.

Yet campaigners insist the amounts of cash required are far less than this. Ros Altmann, the former Downing Street adviser who has taken these campaigners under her wing, calculates a headline figure of around £5bn, or something like £150m annually.


BBC

Wednesday, 15 March 2006

Government rejects pension ruling

http://news.bbc.co.uk/1/hi/business/4805948.stm

The government has rejected a report which calls for it to compensate 85,000 people who have lost all or part of their company pensions.

Tony Blair said taxpayers should not have to bail out private schemes. Speaking to the House of Commons, the prime minister said the government simply could not take on the estimated £15bn compensation bill. He said such a move would "set a precedent of extraordinary financial proportions".


Paul Routledge in The Mirror 17th March, 2006

http://www.mirror.co.uk/news/paulroutledge/

BLAIR'S PENSION COP OUT

IN this country, when the umpire gives you out, you don't argue. You walk from the crease. It is not British to reject his judgment.

So what are we to make of the behaviour of a government that refuses to accept the verdict of Ann Abraham, the Parliamentary Ombudsman?

She held ministers responsible for the wrong advice given to victims of failed company pension schemes.

This is a copout on a grand scale, made worse by the arrogant, condescending manner of the minister responsible, who (naturally) will get a £90,000 pension from public funds.

But there is an issue of principle here. If you go to arbitration, you accept the outcome with good grace - even if you lose. Alas, New Labour does not have any shame, and toadies to the Prime Minister do not come any more New Labour than Hutton.


Mail on Sunday

19th March, 2006

The great pensions injustice

http://www.thisismoney.co.uk/news/article.html?in_article_id=407717&in_page_id=19&in_author_id=3

Financial Mail is appalled by Tony Blair's refusal last week to sanction compensation for these workers - despite a damning report by Ann Abraham into the Government's role in this injustice. If ever there was an overwhelming case for compensation in the world of personal finance, this is it.

By rejecting Abraham's report and denying these workers compensation, Blair has confirmed that he leads a Government that does not care about retaining a healthy occupational pensions sector for future generations.

Labour has missed a great opportunity to restore the nation's trust in pensions. Instead, it has perpetrated one of the biggest financial injustices of all time.


Daily Mail 15 March, 2006

Government betrayal

Tony Hazell, Daily Mail

http://www.thisismoney.co.uk/retirement/article.html?in_article_id=407648&in_page_id=6&ct=5

ONE message rings loud and clear from today's Parliamentary Ombudsman's report into the scandal of pension wind-ups: when it comes to your pension, you can never trust the Government.

…………throughout this disgraceful episode the Government has consistently refused to admit it has done anything wrong - and even yesterday it was still refusing to accept blame or offer full redress to the victims.

It cannot be emphasised too strongly that these people are not layabouts or scroungers. It was not their desire to be going cap in hand to the Government. They worked hard and they saved hard, putting an average of £50,000 into their pensions.


More Daily Mail:

Ministers guilty over pensions

Becky Barrow, Daily Mail
15 March 2006

http://www.thisismoney.co.uk/retirement/article.html?in_article_id=407640&in_page_id=6

The victims had been told by the Government their savings were safe. But, after paying into company pension schemes for up to 40 years, they were left with nothing. The Government will not, however, apologise for its part in the fiasco and has rejected the recommendations made by Ombudsman Ann Abraham.


Sunday Herald editorial 19th March, 2006

Pensions Collapse:

Maladroit government must be held to account over final-salary mess

http://www.sundayherald.com/54626

If the bedrock of Tony Blair’s social philosophy – summed up in his Respect agenda – is that people must calculate the consequences of their actions and take full responsibility, then his own government’s actions over pensions are in serious danger of deserving an ASBO.

In effect, the government already has one. Parliamentary Ombudsman Ann Abraham found it guilty of maladministration in its oversight of company pension schemes.

The government’s reaction? The equivalent of a stiff two fingers from the hoodied teenager in the dock.

There is hope, though. Both Westminster and the European Court could force the government into a U-turn, while trade unions are planning legal challenges based on EU directives they claim were not followed.


Simon Bain in The Herald

16th March, 2006

http://www.theherald.co.uk/business/58206.html

Government has duty to help pension victims, says expert

Christine Farnish, chief executive of the National Association of Pension Funds, said: "The government has to bend over backwards to try to inspire trust and confidence in its ability to handle pensions issues."

It (the PO’s report) notes that when in 2000 the government awarded compensation to pensioners who had been misled by government literature about the second state pension, the then pensions secretary, Alistair Darling, said:

"The public rely on government information and they are entitled to be reassured that leaflets are accurate and comprehensive. As a matter of principle, we believe that when someone loses out because they were given the wrong information by a department, they are entitled to expect the government to put it right."


The Times March 15, 2006

Ministers blamed for pensions advice that was 'incompetent'

By Rosemary Bennett and Christine Seib

http://business.timesonline.co.uk/article/0,,9560-2086541,00.html

In evidence from those affected, Alistair Darling, the former Social Security Secretary, was singled out for criticism. He was accused of dismissing advice from officials to inform members of occupational schemes that their savings could be wiped out if the company scheme collapsed. She also criticised the Government for weakening the regulation of company pension schemes by twice cutting the minimum funding requirement which was designed to ensure that employers paid enough money into the pension scheme.

The ombudsman’s report shows that Mr Darling made a promise that the public would be compensated if his leaflets were found wanting when he awarded reparations to pensioners after the Serps mis-selling scandal.

In 2000 he said:

“The giving of wrong information by a department is inexcusable. The public rely on Government information and they are entitled to be reassured that leaflets are accurate and comprehensive.”


Ministers face pensions backlash after rejecting Ombudsman ruling

By James Daley in the Independent
15th March, 2006

http://news.inent.co.uk/business/news/article351391.ece

The Government’s dismissal of the findings is believed to be the first time the Government has completely disregarded the conclusions of an ombudsman report. It led to outrage from unions, consumer groups and its MPs.

Frank Field, another Labour backbencher and a former social security minister, said: "If [the Government] is serious about restoring confidence [in saving for retirement] - a first step to any lasting pension reform - it will implement the letter and the spirit of the report. Failure to do so will entrench the widespread cynicism among voters that governments cannot be trusted."


Guardian:

Ministers refuse to pay for lost pensions

Rupert Jones and Phillip Inman
Wednesday March 15th, 2006

http://money.guardian.co.uk/pensions/story/0,,1731152,00.html

The report says ministers have not accepted Ms Abraham's findings and told her they were likely to comply only with the last and least controversial of her recommendations. "Therefore, there is no basis on which I can be satisfied that the injustice I have identified will be remedied," she said.


Scotland on Sunday 19th March, 2006

Teresa Hunter

No compensation for pension victims

http://business.scotsman.com/index.cfm?id=430842006

THE biggest financial scandal of modern times, which has left 125,000 without some or all of their pension, was squarely blamed on government maladministration when Parliamentary Ombudsman Ann Abraham published her investigation into the fiasco last Wednesday.

VICTIMS of the pensions scandal were outraged at the government's "10-second" dismissal of the Parliamentary Ombudsman's findings and accused Chancellor Gordon Brown of "destroying pensions" in the same way that Beeching "devastated the railways".